08.22.08

Texas GOP Leaders Want To Use Public Pension Funds To Build Corporate Toll Roads

Posted in Bad Government Republicans, Commentary, Election 2008, HD-52, Had Enough Yet?, Privatization, Road Issues, Transportation, Williamson County at 12:46 pm by wcnews

The AAS today has fleshed out their initial post from yesterday about the letter that Perry, Dewhurst, and Craddick sent to TxDOT head Deirdre Delisi, Sweeping policy changes to jump-start renewed construction of roads proposed. While ending the diversion of road money away from TxDOT, and more debt are important, the key change in policy is the serious thought they’re giving to risking public pensions on corporate toll road privatization schemes. EOW posted on this back in April, Sen. Ogden Wants To Gamble With Your Money, when state Sen. Steve Ogden (R-Bryan) first floated this latest plan of the “something for nothing conservatives“.

Here’s an excerpt from today’s AAS article, (Not happy about this, “[state Sen. Kirk] Watson called the financing corporation an idea worthy of further discussion”):

The invest-in-Texas-roads idea isn’t new. In May 2007, the transportation department’s research division published a report titled, “Transportation Infrastructure Opportunities for State Government Pension Plans.” (You can read it here [.pdf])

The report said “infrastructure investment, particularly in transportation, has the potential to provide strong, steady returns, and pension plan administrators should embrace this new asset class.”

At a March meeting of the Senate Finance Committee, Chairman Steve Ogden, R-Bryan, proposed that the teacher and state worker pension funds could loan money for infrastructure projects on their own accord or invest alongside private entities through a newly created partnership.

“Our trust funds are now investing in infrastructure in other states and other countries,” Ogden said, so it may make sense for the funds to invest in Texas.

Ogden’s Capitol office said he wasn’t available for comment Thursday.

The report needs a little context. It was written by TxDOT to bring in more money to build roads, and is now being used by the Texas GOP as it’s “new” plan to build toll roads. Those footnoted include the “free market” Reason Foundation, the National Chamber Foundation, and the Carlyld Group. While the quote above appears to be the featured quote from the report, there’s also this about the positives and a downside to this plan:

Positive reasons for public pension plans to invest in infrastructure include the possibility of an estimated rate of return in the mid to low teens, steady income, and the opportunity to invest in an asset that pension plan members might actually use on a regular basis (toll roads, toll bridges, etc.). A downside to investing in infrastructure is the risk involved. The biggest risk is in regulation. Investors must know that their deal with a state department of transportation or a public utility will be upheld and enforced and not cancelled before the contract end date. Some investments also carry a physical risk. If a hurricane or earthquake damages a roadway, the investors would have to pay to fix the road. Additionally, the lack of historical data to determine a rate of return is a concern.

(The part about the deals being upheld is probably an attempt to cut of early buyback by the state). Yes there’s risk involved. Are teachers and state employees willing to allow their pensions to be risked in this fashion by Perry, Dewhurst and Craddick? The traditional media should ask. Yes the “investors”, better known as retirees and future retirees, would now have to worry every time a hurricane enters the Gulf that they’re pension will be gone. Oh yeah, and there’s that part about the lack of data too.

All this is folks is a repackaging of the same ‘ol coporate toll road scam they’ve been pushing for years. It’s just a new marketing campaign, Texas leaders agree to end the raid on gas tax funds while promoting the continuation of tolling through other means.

Although the proposals to use bond funding and end the raid on transportation funding appear to change the policy of promoting toll roads, the leaders endorsed a significant expansion in tolling authority. In the letter, the leaders also proposed to “create a Transportation Finance Corporation or similar entity that will allow public Texas-based investment funds to invest directly in Texas transportation projects that offer a potential solid long-term return.” These financing entities are solely designed to construct new toll roads, or fund the imposition of tolling on existing roadways.

This has nothing to do with making money for the public pensions. It’s just another way for them to get money now to build roads and not have to raise taxes while they’re in power. Some day, if this plan was to go through, this money would have to be paid back to the retirees. By then these three, and Sen. Ogden, will be long gone, and they’re counting on enough people not realizing that so this can proceed. There’s only one way to guarantee something like this doesn’t happen. And that’s to make sure that a Republican, be it Tom Craddick or another one, no longer controls the Texas House. It starts here in Williamson County by electing Diana Maldonado, (see below how to help).

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